Saturday, September 10, 2016

SPX S&P 500 Daily Chart Tight Band Squeeze Rising Wedge Collapse

Keystone has highlighted the tight standard deviation band squeeze (purple) over the last couple weeks. it was odd behavior for that tight tunnel to continue for one month before price resolved to the downside. Tight bands do not predict direction only that a huge move is about to occur and it was obviously down. The bottom band is violated so the middle band is in play when price decides to stage a relief rally.

The collapses from rising wedges can be quite dramatic. Keystone says this often so it is notable to highlight the pattern in the chart above. Price fell out of the rising wedge a few days ago, then came back up for a back test of the underside of the lower red trend line of the wedge, and then failed and collapsed. Remember, all chart patterns work the same in any time frame whether the rising wedge is on a monthly chart, weekly, daily, hourly or minute chart.

Watch the 100-day MA support at 2120 since the week ahead will likely entertain drama at this key moving average. The 20-week MA is also at 2120 giving this level further street cred as a key pivot point (bounce or die). The bears flex their muscles on Friday and wipe out two months of stock market gains in a heartbeat. The low CPCE put/call ratio forecasted the pull back ahead of time so all of you were prepared for the market theatrics. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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